California Sues For-Profit College on Fraud Claims

OAKLAND, Calif. (CN) – Accusing a major for-profit college of stealing the “American Dream from its students,” California Attorney General Xavier Becerra on Wednesday sued Ashford University on claims of fraud and false advertising.

Becerra said Ashford and parent Bridgepoint Education, which in 2012 had peak enrollment numbers of 80,000 students and profits of over $120 million, lied about graduation statistics and charged exorbitant tuition fees nearly twice that of some state universities. He claims Ashford inflated alumni percentages and used an “army” of salespeople to harass prospective students.

“Ashford University preyed on veterans and people of modest means,” Becerra said in a statement. “This for-profit college illegally misled students about their educational prospects and unfairly saddled them with debt.”

According to the complaint filed in Alameda County Superior Court, Bridgepoint used aggressive sales tactics to build its “for-profit educational empire.” It gave recruiters enrollment targets and its supervisors publicly embarrassed failing salespeople, the complaint says.

“In short, the sales floor had a true boiler-room atmosphere, which reminds me in many ways of the boiler rooms portrayed in the movie ‘The Wolf of Wall Street,’” an unnamed former Bridgepoint supervisor says in the complaint.

California’s lawsuit comes as the Trump administration seeks to roll back regulations on the for-profit college industry.

Critics have accused federal officials of cozying up to the for-profit college sector after Education Secretary Betsy DeVos hired Bridgepoint executive Robert Eitel as special assistant. Eitel is one of Bridgepoint’s top lawyers, and has defended it in a host of investigations and lawsuits.

Based in San Diego, Bridgepoint has been routinely accused of deceptive loan practices. It settled a 2016 Consumer Financial Protection Bureau investigation and agreed to pay back $23.5 million in student loans as well as an $8 million fine.

Earlier this month, the publicly traded online university announced it was temporarily suspending the enrollment of students using GI Bill benefits. Ashford said in a Securities and Exchange Commission report that veterans comprise approximately 10 percent of its enrollment.

The California lawsuit says the defendants’ counselors lied to incoming students about transferable credits and the length of time it would take them to finish their degrees. As a result, students – primarily low-income and veteran students – accrued massive amounts of debt.

“In today’s economy, college is too pivotal and precious to let a predatory for-profit company swindle our daughters and sons out of the higher education they’ll need to get ahead,” Becerra added.

Bridgestone says it intends to “vigorously defend this case.”

“We are extraordinarily proud of our well-deserved and hard-earned reputation for improving the lives of thousands of students by providing a high-quality education that serves communities and gives families the opportunity to succeed,” Bridgepoint spokeswoman Anna Davison said in a statement.

The complaint also accuses Bridgepoint of threatening and enforcing illegal debt collection fees from students.

According to Courthouse News’ database, Bridgepoint has been sued 21 times nationwide since 2015, mostly on consumer protection and employment claims.